Understanding Reverse Mergers: Animoca Brands' Strategic Move

By: Isha Das

A reverse merger, notable in the crypto and fintech sectors, is a strategic method enabling a private company to become public without conducting an initial public offering (IPO). This process involves merging a private company with a publicly traded company. In the case of Animoca Brands, this involves a merger with AI-focused fintech company Currenc Group.

The process allows the private company to bypass the lengthy and capital-intensive traditional IPO route. Once the merger is completed, the shareholders of the private company typically gain a majority of the shares in the newly formed entity. For instance, Animoca Brands' shareholders are positioned to hold about 95% of the merged entity's issued shares, effectively controlling the public structure.

Reverse mergers can expedite market entry, offering immediate access to public finance markets and enhancing liquidity while mitigating IPO-related risks. However, they also require comprehensive due diligence to manage potential liabilities and changes in ownership structure, ensuring strategic alignment.

For Animoca Brands, a pioneer in digital assets and NFTs, this move broadens their market presence, facilitating growth and investor engagement within the blockchain industry. The acquisition and reverse merger strategy can significantly bolster Animoca's positioning, reflecting a strategic blend of fintech and crypto innovation to deliver value.